(A) Consistent with the requirements of state law, the town requires all bank deposits to be federally insured or collateralized with securities approved for investment under § 31.065. Financial institutions serving as town depositories will be required to sign a depository agreement with the town and the town’s safekeeping agent. The safekeeping portion of the agreement shall define the town’s rights to the collateral in case of default, bankruptcy or closing and shall establish a perfected security interest in compliance with federal and state regulations.
(B) The town considers repurchase agreements as simultaneous sales and purchases of securities rather than collateralized loans; however, securities underlying repurchase agreements are referred to as “collateral” for the purpose of this policy.
(C) Bank demand deposits and certificates of deposit plus accrued interest up to $100,000 per bank do not need to be collateralized pursuant to this policy as long as FDIC insurance is provided.
(D) The Public Funds Investment Act (Tex. Gov’t Code, Chapter 2256) provides that the town may invest in certificates of deposit that are fully guaranteed by the FDIC.
(E) Acceptable forms of collateral are limited to investments authorized in § 31.065.
(F) Collateral shall be audited at least annually by the town’s independent audit firm, and may be audited by the town at any time during normal business hours of the safekeeping party.
(G) Under state law, Tex. Local Gov’t Code, Chapter 105, substitution and release of collateral must be approved by the governing body. The town hereby delegates this responsibility and authority to release and substitute collateral as deemed necessary and reasonable within the guideline of this policy to the Director of Finance and the Town Council.
(Res. 2009-01, passed 3-7-2009)